Could a 529 plan help you pay less for college?

  • College savings plans offer an important tool for managing the cost of higher education.
  • Saving in advance could offer a significant cost savings compared to taking loans during college.
  • Use our 529 Savings vs. Loans Calculator to run your own personalized estimate.

Saving for college early on can greatly benefit you in the long run. By saving in an investment vehicle such as a 529 college savings plan, you may be able to avoid relying on loans or taking from your cash flow in the future to make tuition payments.

Which would you rather pay?

In this hypothetical example, a family with a two-year-old child has a goal of saving enough for a four-year public university – $214,700 (currently $22,800 a year):1

Chart: Investing in a 529 plan now vs. taking loans later

Table: Investing in a 529 plan now vs. taking loans later

Visit the 529 Savings vs. Loans Calculator to run your own personalized estimate.

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Please consider the investment objectives, risks, charges and expenses associated with 529 plan investments before investing. Contact your financial advisor or visit for a program brochure, which contains this and other important information about the plan. Read it carefully before investing. You should also consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.

1 Source: 529 Savings vs. Loans Calculator. Based on the average cost for the 2013–2014 school year at a four-year public, in-state school, a college cost inflation rate of 5% and a 6% investment return on the 529 plan.

2 Assumes a loan rate of 8% and a 10-year repayment period

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